Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Oaktree Capital Group LLC (NYSE:OAK) investors should pay attention to an increase in activity from the world’s largest hedge funds recently. OAK was in 16 hedge funds’ portfolios at the end of September. There were 15 hedge funds in our database with OAK holdings at the end of the previous quarter. At the end of this article we will also compare OAK to other stocks including NVR, Inc. (NYSE:NVR), Apartment Investment and Management Co. (NYSE:AIV), and American Campus Communities, Inc. (NYSE:ACC) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
What have hedge funds been doing with Oaktree Capital Group LLC (NYSE:OAK)?
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a gain of 7% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in OAK over the last 5 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Markel Gayner Asset Management, led by Tom Gayner, holds the biggest position in Oaktree Capital Group LLC (NYSE:OAK). Markel Gayner Asset Management has a $28.6 million position in the stock. The second most bullish fund manager is Hawkins Capital, led by Russell Hawkins, holding a $24.7 million position; the fund has 7.9% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions encompass Chuck Royce’s Royce & Associates, Murray Stahl’s Horizon Asset Management and Mark Travis’ Intrepid Capital Management. We should note that Intrepid Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.